Myths about Libertarianism

Many articles have recently appeared in magazines, web sites, and social media criticizing free markets and libertarian ideas. It seems to me that this opposition is a result of a growing interest in freedom as people realize that the economies of the world are in serious trouble. As people see continuing high unemployment, slow growth, ever greater government debt, environmental disaster, more turbulent weather, and endless wars, some folks seek solutions in greater freedom while others seek solutions in greater state control. The critics of libertarianism and economic freedom have fallen for several fallacies.

1. Critics confuse today’s mixed economies, a mixture of markets and government intervention, with a “free market.” A truly free market is an economy in which all activity is voluntary for all persons. Government intervention changes what people would otherwise voluntarily do. A pure market would not impose the taxation of labor and capital. It would not prohibit trade with Cuba. Free markets would not subsidize industry. Any peaceful and honest action would be free of restrictions and taxes. That is not the economy we have today in any country.

2. Critics use the term “capitalism” to falsely blame markets for economic trouble. Those opposed to private enterprise call today’s economies “capitalist.” They then note that the economy has trouble such as poverty, great inequality, unemployment, and recessions. The critics conclude that “capitalism” causes these problems. This illogic uses a sly change in meaning. They use the term “capitalism” as a label for the current economies and also to refer to free markets. It makes no sense to label the economy as XYZ and then say XYZ causes problems. The critics use the double meaning of “capitalism” to blame the non-existing free market for social problems. This confusion is often deliberate, as I have found that it is almost impossible to get the critics to replace their confusing use of the term “capitalism” with clearer terms such as either the “mixed economy” or the “pure market.”

3. Critics think that the “market” means “anything goes.” For example, they think that a free market allows unlimited pollution. They often call this, “unbridled capitalism.” But freedom stops at the limit of harm. In a pure market with property rights for all resources, pollution that crosses outside one’s own property is trespass and invasion. This violation of others’ property rights would require compensation, and that payment would limit pollution.

4. Critics confuse privatization with contracting out. They then blame private enterprise for problems such as occurs with private prisons. When government contracts with private firms to produce roads, it is still a governmental road. When governments hire private contractors to provide services in a war, it is still government’s war. Government sets the rules when firms do work under contract. Genuine privatization means transferring the whole ownership, financing, and operation to a private firm.

5. Critics overlook subsidies. Government distorts the economy with subsidies to agriculture, energy production, and other corporate welfare. The biggest subsidy is implicit: the greater land rent and land value generated by the public goods provided by government and financed mostly from taxes on labor and enterprise. Critics not only ignore this implicit subsidy but also overlook the explicit subsidies to agriculture and programs such as the promotion of ethanol from corn.

6. Critics do not understand the crowding out of private services because of government programs. The critics of libertarianism say that with less government, old folks and poor folks would starve and die because they would not receive social security and medical care. What they overlook is that the reason many of the elderly have little savings for retirement is that government took away half their income while they were working. Income taxes reduce their net wages, while sales taxes raise the cost of living. Low-income people pay little or no income tax, but they pay hefty sales and excise taxes, and they indirectly pay property taxes from their rental payments to landlords. Libertarians want to abolish poverty and have a society where all people have good medical care. They just want to accomplish this by letting workers keep their full pay, which would enable them to pay for their own medical services. Also, with no taxes on interest and dividend income, people would be better able to provide for their own retirement income, indeed to have much more than social security now provides.

7. Critics fail to understand contractual governance. A pure market would not consist of isolated individuals. Human beings have always lived in community associations. In a free market, communities such as condominiums, land trusts, and civic associations would provide the public goods that the members want.

8. The critics of market believe that corporations control the economy, exploit labor, and plunder the planet. Corporations do have power, but mainly because they obtain subsidies and monopoly privileges from governments. But labor unions and lawyers also lobby the government for power and favors. Rather than blaming private enterprise, the critics should examine how the structure of government enables special interest to obtain power and wealth.

Leo Tolstoy wrote in 1905 that nobody really argues with the economics and philosophy of Henry George and public revenue from land rent; the critics either misunderstand the concepts, or they create misinformation. The same applies to critics of libertarianism. The fact that the critics falsify the free market in criticizing it implies that the actual concept is sound, otherwise they would provide valid arguments.

Nobody has refuted the free market and the libertarian ethic of “live and let live”. The critics of liberty either misunderstand it or else falsify it. Even when their errors in logic, their false evidence, and their confused terminology are pointed out, the critics persist in their falsification. They are stubbornly anchored to their viewpoints. Why this is so is a problem I will leave to psychologists to figure out.

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27 thoughts on “Myths about Libertarianism”

“A truly free market is an economy in which all activity is voluntary for all persons…That is not the economy we have today in any country.”

As far as I know [i could be persuaded otherwise] not only does the economy you describe not exist anyplace today it has never existed anywhere at any time.

I teased Brandon about libertarianism only working if we assume humanity as consisting of uniformly dense spherical entities. It wouldn’t surprise me if one of my colleagues developed a model showing that pure socialism would work if we assume that humanity consists of uniformly dense cubical entities. Yesterday we had a job candidate describe a model of innovation that assumed scientists work for free.

Aside from questions about ‘how could we get there from here’ does the ‘there’ you’ve described even have a chance of existing?

There is no psychological, economic, or sociological reason that prevents a free society. Many people create free societies within their groups when they have clubs and parties. A free society does not imply that every individual is peaceful and honest. A free market and free society exist when the laws prohibit and punish only coercive harm to others. That could exist if a majority of people wanted such a law. There have been peaceful societies such as the pygmies of Africa. The problem today is that most people believe their cultural values should be universal. In my judgment, when most people recognize natural moral law as the proper basis for governance, we will be able to have a truly free society.

I suspect the totally free society is where all civilizations started. Then someone stole something from someone else, and the people got together to deal with the problem of theft. The consensus decided that there should be a right to property, and they reached an agreement with each other to respect that right for each other and to come to each other’s aid when necessary to defend that right.

But when everyone was busy in the fields during harvest, the thief could take whatever he wanted. To deal with this problem, a consensus agreed to hire a policeman to watch their homes while they were away.

To pay for the policeman, they agreed to share the cost of his salary. And they decided that the farmers with the most wealth to protect would pay the largest share of the policeman’s salary.

But one of the farmers decided to opt out, and said he’d look out for his own property. You see, in looking out for everyone’s property, the policeman would have to lookout for his anyway (their homes and wealth were in a central town, surrounded by their fields).

This ticked off the other farmers, because they now had to pay his share as well as their own. So they agreed that everyone in the town would pay their share, whether they wanted to or not.

Rather than concede the fairness of this decision. The rebel farmer came up with an elaborate rationalization, claiming that it was morally wrong to compel him to do anything he personally disagreed with.

This failed to convince the others. Because they had heard the same argument from the thief when they passed the law against stealing.

I’m curious about the pollution issue in item 3. Didn’t the EPA attempt to regulate pollution from the smokestacks in one state when it threatened to harm the health of citizens in adjoining states? And wasn’t that opposed by the free marketers?

And isn’t government the only recourse for establishing and enforcing the rules of commerce, such as providing a law against pollution that harms others and then enforcing that law through courts?

How does the Libertarian both oppose these regulations against harmful emissions and at the same time insist that his property be protected from harm?

Yes, the EPA regulates pollution from smokestacks. Free marketers, along with economists, generally believe that emission charges are more effective than command-and-control regulations. It is possible for there to be voluntary governance with rules and charges on pollution, but yes, given the existence of imposed government, it should include pollution in its laws prohibiting or penalizing coercive harm. Libertarians propose alternatives to pollution regulation such as transferable lawsuits, but many do favor pollution taxes as compensation for the damage done. Pollution charges are both less costly and more conducive to liberty than regulations.

In practice, a freer market usually precedes regulation. Competition leads to short cuts to produce the most product at the lowest cost. If one producer spends extra to scrub his emission, his prices are undercut by the guy who doesn’t have that extra cost. So there is a “race to the bottom” motivated by business survival. A law that limits pollutants applies to all competitors, making it possible to recover the cost of cleaner air by passing it on in the price of the product — without worry that your price will be undercut, because all competitors now have the same expense.

I would think this would be better than litigation. Law makes things predictable. Litigation is a random expense with unpredictable costs and rewards.

Thief: ” (A) I propose that we maximize our liberty by agreeing not to coerce anyone into doing or refraining from doing anything. The only wrong is to initiate aggression, which is to use force to compel others to do our will. Once we allow that, then all our liberty is put at risk.”

Thief: “(B) Since I have injured no one and I have acquired property only through stealth, and never through aggression or threat of violence, I should be allowed to continue to steal.”

Thief: “(C) And since I have come by my skills through hard work, study, and practice, it should be the case that by joining my work with an object should make that object my property.”

The community decided to reject the thief’s argument because it was more important to respect and protect a right of ownership that required an exchange of goods, so that the production of goods could be maximized to everyone’s benefit.

So, when the tax evader made the same argument as the thief, the town was not buying it. The tax evader was a thief, except instead of stealing a lot from one person, he stole a little from everyone who had to make up his share of the cost of the police force.

Even when the tax evader attempted to modify the non-aggression principle by saying theft as an act of aggression, even when it involved no force and no coercion and no violence, they would not buy it.

But the tax evaders, throughout history, continued to make their argument more elaborate, and more subtle, but always boiling down to a desire to have their own way, regardless of anyone else’s rights.

You’ve constructed some mighty good-lookin’ men of straw, and it’s a shame to have to watch you knock them all down. For instance, you write:

I suspect the totally free society is where all civilizations started. Then someone stole something from someone else […]

This is a straw man fallacy. A straw man fallacy occurs when somebody constructs an argument that has not been made and proceeds to knock it down as if it is an argument that has been made. Why would a totally free society not have rules prohibiting theft? A totally free society has rules and regulations (as Dr Foldvary points out in the article), it is just that these rules and regulations are strictly defined and limited to these definitions.

In addition to your (quite beautiful) straw man fallacy, you make some assertions that are simply not true. For instance, you write:

In practice, a freer market usually precedes regulation.

I have never heard of this before. I suspect it is patently false because of the words “in practice.” Anytime I hear somebody use the “in theory it sounds good, but in practice it sucks” argument I get suspicious. It doesn’t mean my suspicions always pan out. Sometimes my suspicions are wrong, but I think in this case I am probably right in guessing that you are (inadvertently) spreading a falsehood.

The internet, for example, started out in a highly-regulated sector of the economy. It has only flourished as regulations became obsolete. Same goes for the Industrial Revolution in Great Britain and the Netherlands. Heavy regulations stunted economic growth for millenia. It was only after regulations were ignored, or altered, that the Industrial Revolution was able to occur.

One more goodie for the day:

Law makes things predictable.

This must be why the United States has been able to fight such a successful war on drugs, right?

(A) “A totally free society has rules and regulations (as Dr Foldvary points out in the article), it is just that these rules and regulations are strictly defined and limited to these definitions.”

I think not. Every regulation limits freedom in some way. Therefore a “totally free society” cannot have any. Add one rule and the individual is no longer totally free. That’s a priori from the definitions of “free” and “totally”.

What I am saying is that at some point in evolution two or more creatures existed with no other rules than the basic internal drives that motivated them to find food, etc. for survival. There was not yet any agreement among them as to any other rules or rights.

Beginning there, the competition for scarce resources led individuals to kill each other, until two or more of them decided to cooperate for their mutual benefit, and the first society came into being. And that is where I choose to start.

No one was there to observe or record this, of course. It would be an evolutionary event during pre-history, but one which is reasonable to surmise as necessarily preceding the first agreement to the first rule.

(B) Rules have reasons. A society of two or more people establish a new rule when a consensus agrees that the benefit of the rule outweighs the loss of freedom to do what the rule prohibits. A rule against stealing doesn’t just drop out of the sky (at least not until the deontologist write a myth that it does). Those who have benefitted from stealing need to be convinced that they will be better off without that liberty. And, for those who are not convinced, a sufficient number of others must be convinced to establish the rule without them.

All practical rights, and the rules that protect them, arise from an agreement. A consensus of society agrees that they will respect and protect this new right for each other. And probably one of the earliest was the right to property.

When I say that a freer market always precedes regulation, I am summarizing a fact of life. When I was younger, there were no inspections at airports. After a few planes were hijacked, you were no longer allowed to carry a gun on a plane. After the 9/11 hijackers used box cutters to take over the plane, you could carry no knives. After explosives were discovered in a terrorist’s shoes, you had to take your shoes off. Etc. Etc. Etc.

I think I can safely say that every rule of commerce was preceded by bad behavior that needed to be prevented. This includes child labor, unsafe factories, minimum wages, etc.

(C) Laws do make things more predictable than law suits. Take the law against using lead in paint, for example. A simple rule banning the use of lead paint is certainly better than hundreds of law suits heard by hundreds of different judges.

Marvin, thanks for your response but you are still knocking down a straw man. For example, you argue that:

Every regulation limits freedom in some way.

This is simply not true. If it were true you’d have a hell of an argument. Alas.

Being able to kill somebody else at will is not a freedom. It’s not even a “savage freedom.” It was once considered a privilege for elites to be able to kill at will (and still is in some places), but not a freedom.

You are attributing an argument to me that I have not made and then knocking it down.

The rest of your argument follows a similar pattern of faulty logic. Congratulations on such a beautiful straw man, though. Somehow I suspect that in MarvinLand (where “facts of life” are considered more relevant than half a century of empirical studies), your fallacies receive all sorts of laudatory recognition from the peanut gallery.

You seem to be using a private definition of “freedom”. Here is the definition of freedom that I believe to be correct: Person X may do anything he chooses, including eating meat. Person Y may do anything he chooses, except he may not eat meat. Person X has more freedom than Person Y.

And to keep the language consistent, being “permitted” (absence of a rule against it) to kill someone is different from being “able” (physically capable) to kill someone.

Brandon: “The rest of your argument follows a similar pattern of faulty logic.”

Empty, rhetorical assertion. Not a logical argument.

Brandon: “Congratulations on such a beautiful straw man, though.”

Assuming facts not in evidence. Not a logical argument.

Brandon: “Somehow I suspect that in MarvinLand ”

Resorting to personal attack. Not a logical argument.

Brandon: “(where “facts of life” are considered more relevant than half a century of empirical studies)”

Assuming facts not in evidence. If you have an actual empirical study, then by all means bring it to the table.

Brandon: “your fallacies receive all sorts of laudatory recognition from the peanut gallery.”

Again, a rhetorical statement with absolutely no evidence.

Brandon: “You are attributing an argument to me that I have not made and then knocking it down.”

I’ve been explaining my viewpoint. I’m uncertain what arguments I’m supposedly attributing to you. I have not yet seen much from you other than an attempt to display some knowledge of “formal logical fallacies”.

Would you care to offer an alternative view as to where rules and rights come from?

A “private” definition? I’ve never heard of such a thing. How would my definition be “private” and yours not?

You are obviously confused about what freedom means (and here is the Oxford dictionary’s definition of freedom, by the way).

Being prohibited from eating meat is definitely a restriction on freedom. Being prohibited from killing another human being is not a restriction on freedom (same goes for stealing) because killing restricts the freedom of others. Eating meat does no such thing.

Your straw man fallacy – the same one you’ve been repeating over and over again – is not fooling anybody (except perhaps yourself). Straw man fallacies are not your only problem when it comes to thinking through your arguments, Marvin. For example, consider your attempt to chastise me with the following line:

And to keep the language consistent, being “permitted” (absence of a rule against it) to kill someone is different from being “able” (physically capable) to kill someone.

This may be a factually true statement. Unfortunately, it has absolutely nothing to do with anything in my argument. Why would you take the time to chastise me for something that’s totally irrelevant to our argument at hand?

Dr Foldvary quit arguing with you because he has seen your fallacies over and over again throughout a long and distinguished career as an academic economist. The difference between you and hundreds (if not thousands) of students he has educated over the years is that his students were polite when they had questions or misunderstandings about how societies and economies operate, whereas you have simply been asserting your fallacies as if they were well-informed and authoritative.

Does this make sense?

Addendum: I think I may be overanalyzing your responses, so instead I think I’ll just ask you: What exactly are you trying to refute, and which aspect of your argument refutes Dr Foldvary’s?

Brandon: “Being prohibited from killing another human being is not a restriction on freedom (same goes for stealing) because killing restricts the freedom of others.”

Actually, being prohibited from doing anything is a restriction upon the freedom of the person who wants to do that thing. The OD says, for example, freedom is “the power or right to act, speak, or think as one wants”. Obviously if someone wants to steal and is prohibited from stealing, then his freedom is restricted.

You seem to have adopted a different definition, in which a rule against stealing is not really a restriction on freedom because it promotes the optimal freedom for everyone. I don’t think you’ll find that in the OD.

On the other hand, I do agree that all rules are intended to improve the total good and reduce the total harm for everyone. But to achieve that benefit, the rule diminishes the total liberty of everyone.

If I’ve misunderstood you, then feel free to explain what you really meant to say. Accusing someone of attempting to create a straw man argument is attacking only me, and not my argument.

Brandon: “Dr Foldvary quit arguing with you because he has seen your fallacies over and over again throughout a long and distinguished career as an academic economist.”

Again, appealing to authority is not making a reasoned argument. You seem to be taking offense that anyone who would dare to disagree with or question anything he or you have said. Taking offense where none has been given is also rhetoric, not reason.

Brandon: “What exactly are you trying to refute, and which aspect of your argument refutes Dr Foldvary’s?”

First, it’s not Dr. Foldvary that I am having difficulty with. It is rather the unsubstantiated myths promoted by Libertarians generally that are the problem. For example, “In my judgment, when most people recognize natural moral law as the proper basis for governance, we will be able to have a truly free society.”

It is nothing but a rhetorical claim to say that my personal collection of moral laws are “natural”, “God given”, or “inherent”. Jefferson was speaking rhetorically (to sway emotional support) when he said “endowed by their Creator”. But when he said, “to secure these rights, governments are instituted” he was speaking of practical rights.

All practical rights arise by an agreement among us to respect and protect a certain right for each other. If I see someone stealing my neighbors car, and I simply watch in amusement, then his property right becomes rhetorical. If I call the police, which is what I’d expect him to do for me if it were my car, then the right becomes practical.

Foldvary: “1. Critics confuse today’s mixed economies, a mixture of markets and government intervention, with a “free market.” A truly free market is an economy in which all activity is voluntary for all persons. Government intervention changes what people would otherwise voluntarily do. A pure market would not impose the taxation of labor and capital. It would not prohibit trade with Cuba. Free markets would not subsidize industry. Any peaceful and honest action would be free of restrictions and taxes. That is not the economy we have today in any country.”

Either the market is “truly free” or it is subject to at least some regulation. Since every market is subject to at least some regulation, it would be correct to say that none are “truly free”.

Government regulation generally does not permit monopolies, except where regulated sufficiently to protect the public (water supply, electrical power, etc). Is this a regulation that we should eliminate to make the market “truly free”?

In response to the loss of lives in the mining and manufacturing industries, government regulation requires safety precautions and inspections, like under OSHA. Should this type of regulation be eliminated to make the market “truly free”?

In response to the financial collapse of 2008, government is finally taking steps to bring the shadow derivatives market into the sunlight (which it should have done back when Brookesly Born was head of the CFTC instead of undermining her attempt to regulate derivatives, as Greenspan did due to his infatuation with the ideas of Ayn Rand).

Yes. Government regulation sometimes changes what people would normally do of their own free will. When your competitor does not have to pay for worker safety, then you cannot afford to pay for it either, not without going out of business.

The presumption that if everyone is left alone then everything will magically work out is an unsubstantiated, but nevertheless religiously held belief of the fundamentalist Libertarian.

And it can only be sustained by cherry-picking the evidence or rewriting history.

Positing a ‘state of nature’ would require substantiation. Anthropologically speaking, the human condition and animal is partially defined by our social nature — and all societies have organization and hierarchies. It is much easier to substantiate the claim that in the observable human state of nature, we interact in a social way. Hobbes, Locke, and Marvin need to read up on empirical thought.

You’re quite right. It’s not like we could start an intelligent species with a short enough life cycle that we could observe evolving its social structure in our laboratory.

But we do have empirical data on humans as recorded of history, sociology, and anthropology. And we have empirical data on other animal species to draw from. Still we are left to extrapolate back from what we know to what we don’t know.

The fictional book “Lord of the Flies” attempts to show how a group of choir boys stranded on an island after an airplane crash devolves into a hunting pack, attacking their own weaker members.

History shows many societies evolving from tribal or feudal status under the rule of family heads or by kings, then revolutions establishing democratic legislatures. We have the American Revolution where the people united to formally constitute a new government to throw off imperial rule by a foreign king.

History also shows that “might makes right” was effectively the rule followed by foreign invaders, like Attila the Hun or the Vikings, etc.

Martin is still relying upon fictional arguments to make his point. For example, he rightly points out that “we do have empirical data on humans as recorded of history, sociology, and anthropology.”

Unfortunately, he gives us no links or directions to delve into these records ourselves (or to bolster his claims). Instead, we are left with “the fictional book ‘Lord of the Flies'” and a couple of “history shows…” remarks.

This is telling, I think, as it shows that Martin is not really interested in furthering our understandings of anything. Criticism is generally defined as “the activity of making careful judgments about the good and bad qualities of” an idea or person or work of art. ‘Careful‘ is the operative word here.

The purpose behind criticism is, of course, to gain a better understanding of an idea/person/piece of work. Without criticism an idea becomes stagnant. However, people like Martin are not really engaging in criticism. He continues to blatantly misrepresent the positions of others (which goes against the “careful judgments” of actual critics), and relies upon definitions that nobody has heard of except for Martin himself.

Critics like Prof Terry can help to clarify thoughts and perception with their remarks. Trolls like Martin simply muddle an argument. This is done on purpose, I think, because of hostility to an idea or because of a lack of understanding of an idea (which can make people feel insecure and thus more likely to engage in childlike behavior).

[…] the window as they drive by our humble consortium. Marvin’s comments in Dr Foldvary’s recent post on myths about libertarianism is a case in point. Attempting to take me to task for committing a […]

Brandon: “Unfortunately, he gives us no links or directions to delve into these records ourselves (or to bolster his claims).”

My arguments are mostly based upon general knowledge and reasoning. I’m assuming you’re already familiar with enough history to recognize my references to peoples being invaded by other peoples and feudal kings being overthrown to establish democratic government, etc. And you know enough anthropology to know what I mean by prehistoric men. I’m not trying to teach history, but simply using what everyone already knows.

Brandon: “He continues to blatantly misrepresent the positions of others..”

First, I don’t believe that is the case. Second, the nice thing about a discussion thread is that anyone who is being misrepresented can post a response to correct the record.

Brandon: “and relies upon definitions that nobody has heard of except for Martin himself.”

The only word where that might be the case is “morality”. Most people use it interchangeably with “ethics”. But I think we need a word for the “intent to achieve good for others as well as for ourselves”. So I’ve appropriated the word “morality” for that. And I distinguish the moral person who possesses that intent from the ethical person whose main concern is to follow the rules.

Our disagreement over the definition of “freedom” is apparently a disagreement. I believe that my usage of the term is correct. But we’ve already discussed that.

Brandon: “This is done on purpose, I think, because of hostility to an idea or because of a lack of understanding of an idea (which can make people feel insecure and thus more likely to engage in childlike behavior).”

You may have noticed that I generally ignore personal attacks like that one. I’m trying to “PLEASE KEEP IT CIVIL” as your heading to the comment block requests. But I also know that it is much easier to attack me than to attack my argument. And I rely on the intelligence of any other readers to realize the same.

@Marvin
“The only word where that might be the case is “morality”. Most people use it interchangeably with “ethics”. But I think we need a word for the “intent to achieve good for others as well as for ourselves”

I have to agree with Brandon. Mores and morality already have conventional definitions and to be honest they’re not very close to the phrase you have above. You’re better off just using the full phrase than appropriating morality.

Perhaps. But the only other word for the intent is “love”, and that is not only overloaded with alternate meanings, but it sounds rhetorically soft.

I’ve also suggested a distinction between a “moral person” and an “ethical person”. The ethical person would feel compelled to tell the truth to the Nazi at the door who asks if any Jews are in the house. The moral person would feel compelled to lie to protect Anne Frank’s family from harm.